SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

Annual Report Filed pursuant to Section 13 or 15(d) of

THE SECURITIES EXCHANGE ACT OF 1934

for the fiscal year ended December 31, 1998, file # 33-38119-C

KENSINGTON INTERNATIONAL HOLDING CORPORATION
formerly known as 
THE KENSINGTON COMPANY , INC.
      (Exact name of registrant as specified in charter)

Minnesota                           41-1619632
(State or other jurisdiction    (IRS Employer ID Number)
of organization)

Interchange Tower, Suite 654, 600 S. Hwy 169, Minneapolis, MN 55426
(address of principal executive offices)

Registrant's telephone number is(612) 546-2075

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: 

                        Common Stock, No par value
-------------------------------------------------------------------
(Title of Class)

     Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act 
of 1934 during the preceding 12 months, and (2) has registrant been subject to 
such filing requirements for the past 90 days.

Yes xNo__

The number of shares outstanding of each class of the registrant's common 
stock as of December 31, 1998 was 3,238,750 shares.

The estimated market value on December 31, 1998 of the voting stock held by 
non-affiliates of the registrant was $404,844 based upon recent private 
transactions at $.125 per share. Currently there is a public market on the 
Bulletin Board on the Minneapolis Local over the Counter Market with a call 
sign of "KNSC".
     

Exhibit Index on the Sequential page 18 

Page 2

DOCUMENTS INCORPORATED BY REFERENCE: SEE EXHIBIT INDEX     

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this document which are not historical facts may be considered 
"forward looking statements" within the meaning of Section 21E of the 
Securities Act of 1934, as amended, including projected sales and cost 
savings. The words "believe", "expect", "anticipate", and similar expressions 
identify forward looking statements. Any forward looking statements involves 
risks and uncertainties that could cause actual events or results to differ, 
perhaps materially, from the events described in the forward looking 
statements. The Company undertakes no obligation to publicly update or revise 
any forward looking statement. The risks associated with forward looking 
statements could be caused by anything that occurs in the future.

Description of Business


KENSINGTON INTERNATIONAL HOLDING CORPORATION, formerly known as THE KENSINGTON 
COMPANY, INC. was formed in 1988, initially for the purpose of developing oil 
and gas properties in Kentucky.  It is a reporting public corporation quoted 
on the "pink and white sheets" as well as the bulletin board, and its call 
sign is "KNSC". At present the Company has approximately 300 shareholders. 
Kensington owns 100% of one operating company, namely, Ives Design, Inc., a 
Minnesota corporation. Kensington also owns 80% or more of four non-operating 
corporations, namely, I-Med Software,Inc., Interchange Medical ,Inc. both 
Minnesota corporations, and Kensington American Gas Drilling #1, a Minnesota 
LLC as well as Bluegrass Management and Operating Company, a Kentucky 
Corporation. Additionally, the Company owns a minority limited interest in an 
oil and gas partnership. During 1995, the Minnesota Secretary of State 
requested that the Company change its name because it was too similar to 
another company's name. The name change was approved by Kensingtons' 
shareholders during 1996 and the name was changed to "Kensington International 
Holding Corporation" during 1997. 

The Kensington Company, as stated above, is comprised of:

A. IVES DESIGN, INC.

In April 1992, the Company acquired 100% of IVES DESIGN, INC. ("Ives"), a 
manufacturer of store display fixtures. The primary components of such 
fixtures are wood and laminate but many fixtures incorporate acrylic, glass 
and or metal. The Company provides a broad spectrum of services to its 
customers including design, manufacturing, delivery and installation. Fixtures 
are sold to a wide variety of customers ranging from retail and grocery stores 
to private companies and churches. Several customers are members of the 
Fortune 1000. Sales are obtained through direct sales contact as well as 
referrals. The raw material used in production is widely available and 
procured from a number of sources depending on pricing and vendor stock. As of 
December 31, 1998 Ives employed 26 full time employees.  

Significant markets, customers and suppliers

Ives
     While the loss of the largest customer would have an adverse effect on 
the Company such an event is unlikely since they have continued to utilize the 
Company more and more. Through expanded sales efforts the Company has reduced 
the sales to its largest customer, and its affiliates, as a percent of total 
sales, to 82% in 1998. The Company presently has no contractual commitments 
with any customers but works against purchase orders for its sales. 

      The Company believes that the number of potential suppliers of the 
materials utilized by Ives in fashioning its products are sufficient that the 
loss by Ives of any one or a number of its present suppliers would not have a 
material adverse effect on Ives' business.     

     Ives' products are not seasonal products and are sold throughout the 
year.

Regulation of the store fixture industry
     There are federal and state regulations governing the Ives operation to 
the extent of Environmental Protection Agency and OSHA rules that apply to 
disposal of waste from painting and sealing of product. Ives has a program in 
effect for both situations.

Competition within the store fixture industry
       Ives does have a number of competitors and bids most of its projects. 
Notwithstanding, sales have continued to increase and management believes that 
the Company is competitive with respect to both price and quality of its 
products.

B. OIL, GAS, AND ENERGY OPERATIONS
     In 1992 the Company purchased limited and general partnership interests 
in gas wells in Texas, Arkansas and Oklahoma as well as 100% ownership of 
American Gas Corporation's gas wells and pipelines in Kentucky. 

    During 1994 and 1995 most of American Gas' operations were shut down 
because the Company could not find good operators. Subsequent testing by 
Tauren Exploration concluded it was not feasible to extract the gas in the 
eastern Kentucky fields. In 1998 Kensington sold its' interest in the Tanyard 
field, located in western Kentucky. Kensington has written off virtually all 
the assets associated with its eastern Kentucky fields as of December 31, 
1996. The Company continues to receive insignificant revenues on a regular 
schedule from its interests in Texas, Arkansas and Oklahoma oil & gas wells. 
It is the Company's intention to slowly remove itself from the oil and gas 
industry.

American Gas Corporation changed its name to PowerSource Corp. on May 12, 1998 
and became a licensed Energy Service Provider in California and a Wholesale 
Electric Power and Energy Transactions Marketer and Public Utility Company 
licensed by the Federal Energy Regulatory Commission as reported in the 
Company's 10-QSB for the Quarter ending September 31, 1998. New purchasers 
were issued new stock and Kensington retains less that ten (10%) percent of 
the stock in PowerSource. In addition, PowerSource Corp. is to pay Kensington 
$3,000 a month for five years for consulting but it has been unable to do so 
and has had to accrue that amount on its financial records. 

Regulation of oil and gas
     Although the oil and gas industry is extensively regulated by federal, 
state and local authorities, these regulations should not impact the Company 
since the Company has ceased its direct operations.

Competition within the Oil and Gas industry
     Competition in the oil and gas business is intense but this should not 
affect the Company due to its operational shutdown.

     Company Direction:
     Ives Design Inc.
      It is management's intention to continue to expand Ives  through sales 
to new customers as well as expanding sales to existing customers. 
Acquisitions and mergers are another mode of growth which Ives is exploring, 
along with internet E-commerce.

     Equity Acquisition Program
     
     Kensington intends to expand into internet E-commerce through Interchange 
Medical, Inc. or through a new subsidiary. Kensington is actively looking for 
internet opportunities, as is I-Med Software, Inc.  Kensington is in 
discussions with computer hardware and software resellers to jointly market 
computer furniture through Ives Design, Inc. and Interchange Medical, Inc.

     I-Med Software continues to remain inactive. Kensington is looking into a 
new internet e-mail technology that would provide a simple solution for 
sending graphics and voice messages over the internet using e-mail. Kensington 
has registered the domain names "Simpleemail.com", "Simpleesite.com", and 
"Simplebuys.com".

     Kensington owns 125,000 shares of Maxwell Rand Holdings, Inc. which has 
signed a merger agreement with FutureTrak International, Inc. (FTRK, OTC:BB) 
in which Kensington would receive 125,000 shares of FutureTrak International, 
Inc. FutureTrak intends to use Maxwell Rand's compression technology to 
enhance it DIRECTV, internet access, and telephony wireless systems.

     Kensington American Gas Drilling #1, LLC is not an operating company.

     Bluegrass Management & Operating Company holds 242,714 shares of 
PowerSource Corp. but has no other assets or operations.

     Kensington owns a little over 14,000 shares of Netgates (NTGS, OTC:BB) 
which owns a major interest in the Ocean Manor Hotel in Ft. Lauderdale, 
Florida. It is anticipated that a Mexican hotel chain will purchase a majority 
interest in Netgates.

     Kensington helped found Metropolitan Health Networks (MDPA, NASDAQ) in 
early 1996 and has a subscription to receive another 12,500 shares of stock. 
Kensington sold approximately 18,000 shares in 1998 of Metropolitan Health 
Networks.

     Kensington owns approximately 20% of Netcast Radio Networks, Inc. 
(727,288 shares) but it is not operating and has no value. 

     Kensington holds five year warrants to purchase 90,000 shares of 
Transplantation Technologies, Inc. (TTI) for ten cents each ($.10). TTI is a 
biotechnology company which has technology to treat immunologically based 
diseases.

     Kensington did sign a Letter of Intent, in October, 1998, with a 
Professor of Psychology, Electrical & Computer Engineering and Ophthalmology 
for the development of a non-invasive glucose monitor. Kensington has not been 
able fund this project and may be forced to cancel the Letter of Intent.

New Opportunities
     It is also management's intention to continue to obtain equity interests 
in other corporations in return for the Company's management expertise. 
Management is of the opinion that it can obtain a 1% to 10% equity interest in 
these new companies with little or no capital investment as was concluded in 
the past.
  
Item 2.  Description of Property
     At present, the Company's principal office is located at 600 S. Highway 
169, Suite 654, Interchange Tower, Minneapolis, Minnesota, 55426, occupying 
approximately 700 square feet and utilized entirely for executive offices. The 
lease was entered into in March 1997. The space is rented under a written 
lease which provides for payment of rent at a monthly rate of $1,324 and runs 
through March 2000. 

     As a result of its acquisition of Ives, the Company owns two buildings. 
One building has 25,500 square feet, located at 1333 Constance Boulevard, Ham 
Lake, Minnesota. Approximately 2,500 square feet are utilized for offices and 
23,000 square feet for manufacturing. There is also a 7,200 square foot 
storage building.   

Item 3:  Legal Proceedings
There are no legal proceedings that management is aware of at this time.

Item 4:  Submission of matters to a vote of Security Holders

    None


PART II
Market for Registrant's Common Equity and Related Stock-holder matters.

Item 5:   Market for the Common Equity and Related Stockholder Matters
    During 1998 the stock was quoted at a low of $.03 to a high of $.56. On 
December 31, 1998 the stock was quoted at a bid of $.03 with an asking price 
of $.25 and a sale price of $.125. Since the Company is not NASDAQ qualified, 
these prices are inter dealer prices and may not reflect actual value or 
transactions.
 
(a) Market Information

The Registrant's securities are traded on the Bulletin Board as "KNSC".

     (b) Holders
At December 31, 1998 there were approximately 300 shareholders of record 
including people who held stock in "street name".
(c) Dividends
The registrant has not paid dividends on its common stock and does not expect 
to in the foreseeable future. 

Item 6:  Management's Discussion and Analysis of Operations
Selected Financial Information:
                             1997              1998          
Total Revenue               $3,151,241     $3,934,579     
Cost of Sales                2,008,436           2,652,620     
Gross Profit               $1,142,805         $1,281,959     
Operating Expense           951,316             975,204      
Loss on impairment of Oil
and Gas Investments                            ( 19,154)
Inc (Loss) from Operations $191,489      $ 287,601  
Other Income (Expense)     (155,103)       ( 86,573)      
Provision for Income Tax                                  
Net Income (Loss)           $  40,386      $ 201,028      


1998 revenues grew 25% over 1997. This was accomplished through increased 
sales to both new and existing customers. Cost of goods sold increased to 67% 
of revenue for 1998 as compared to 64% for 1997. This increase was due to 
increased material, labor and outsourced costs. By keeping operating costs 
close to 1997 levels  the Company was able to increase net income to 5.5% of 
revenue as compared to 1.3% in 1997. Other income includes the sale of stock 
from the equity acquisition program, which was outlined earlier. Interest 
costs were reduced through the reduction of long term debt. In 1998 the 
remaining long term debt which became due was either paid off or extended for 
another three years.   

Ives Design Inc.
1998 was a year of continued growth for the company. Sales grew approximately 
25% from 1997 to 1998. With the addition to the sales force, Ives was able to 
reduce the percent of sales made to its largest customer and its' affiliates 
by an additional 2%. Cost of goods sold were up over 1997 levels due to 
increases in material costs, increased labor costs due to a tight labor market 
and an increase in the level of outsourcing costs. The Company made a 
calculated decision to outsource some manufacturing in order to expand 
business even though margins were adversely affected. By controlling overhead, 
the Company was able to make up the loss in margin and record higher 
profits.   
 
Year 2000

Item 7:  Financial Statements 
    The Consolidated financial statements of the Company are included herein 
following the signatures, beginning at page 
F-1.

Item 8:  Changes and Disagreements with Accountants on Accounting 
         and Financial Disclosures
     None


Part III
Item 9.  Directors, Executive Officers, Promoters and Control Persons

MANAGEMENT
          The executive officers and Directors of the Company are as follows:
Name                              Age               Position

Keith A. Witter                 51                 Director

Mark Haggerty                    50             Chief Executive 
                                                   Officer & 
Director                              
Keith Bernhardt                77               Director

Dr. Graeme Wallace               57               Director

Holly Callen Hamilton          50               V. P. & Secretary

Mike Nakonechny               71               Chairman

Jeff Etten                     42     Chief Financial Officer

Directors are elected for an indefinite term not to exceed five years, 
expiring at the annual shareholders' meeting next held after their election 
and until their successors are elected and qualified.  Officers are appointed 
by the Board of Directors and serve at its discretion.

Keith A. Witter has been a Director of the Company since May 1, 1993.  From 
January 1992 to April 1993, Mr. Witter served as President and Chief Operating 
Officer of the Company.  He received a B.A. in business administration and 
economics in 1969 from Gustavus Adolphus College, and in 1973 obtained a JD 
degree from the University of Minnesota Law School.  Since 1984, Mr. Witter 
has served as President and owner of Askar Corporation, a securities 
broker-dealer with 85 representatives in five states.  He also is the 
President of F.F.P. Investment Advisors, Inc., a financial planning firm, a 
position he has held since 1984. Mr. Witter has been involved in the oil and 
gas business having served as President of Kensington Energy Corporation from 
June 1992 until December 31, 1992.  

Mike Nakonechny lives in Pennsylvania and is an Electrical Engineer. He has 
been a Director since October 15, 1994. Mr. Nakonechny is on the Boards of 
Mentor Corporation of Minneapolis and Silicon Technology Corporation and his 
own company, NAK Associates Corp. He founded and was Chairman of Tranducer 
Systems, Inc. a public company in Pennsylvania.

Mark Haggerty became an employee of Kensington on May 1, 1993 and became 
C.E.O.-C.O.O on September 9, 1993. Mr. Haggerty is a graduate of the 
University of Minnesota Law School and is a practicing attorney.  From 1974 to 
1985 he served as a prosecutor in Anoka County, Minnesota.  From 1971 to 1985 
Mr. Haggerty was employed as an attorney with the Minneapolis law firm of 
Smith, Juster, Feikema, Malmon and Haskvitz and was its youngest shareholder, 
officer and director.  In 1985 Mr. Haggerty was employed as a Senior Vice 
President at Miller and Schroeder Financial, Inc., Minneapolis, where he 
remained until 1987 when he formed Haggerty & Associates, Inc.  During the 
past eighteen years Mr. Haggerty has structured and closed more than 150 
taxable and non-taxable financing and marketing programs both in the United 
States and Europe.  Mr. Haggerty is also a Registered Securities 
Representative. He serves on the Board of Directors of Ives Design, Inc., Star 
Entertainment, Inc., Island Grill, Inc., and Haggerty and Associates, Inc. 
Haggerty has been a Director since October 15, 1994. Mr. Haggerty was elected 
a Commissioner of the Hennepin County Parks in 1996.

Keith Bernhardt has served as a Director since September 1992.  From 1983 to 
present Mr. Bernhardt has been semi-retired but engaged in the sale of 
machinery used to change hot-rolled steel into cold-rolled steel for use in 
the automobile industry.  Mr. Bernhardt was one of the founders of American 
Gas. Mr. Bernhardt
graduated from Purdue University in 1942 with a degree in mechanical 
engineering.  He is a certified Retired Professional Engineer, licensed with 
the State of Connecticut.

Dr. Graeme Wallace has been a Director of the Company since April 1992.  
Commencing in 1985 he was the Co-Founder and Managing Partner of Wallace Bond 
& Partners Inc., a Canadian based firm in Toronto offering human resource 
consulting services.  In April 1993 Dr. Wallace sold his interests in Wallace 
Bond & Partners, Inc. and founded Wallace and Partners, Inc, also located in 
Toronto.  Dr. Wallace earned both his B.A. and M.Sc. degrees from Monash 
University, Melbourne, Australia, in 1967 and 1970 respectively.  He obtained 
a Ph.D. in psychology from McGill University, Montreal, Canada in 1972.

Holly Callen Hamilton is Director of Development for Women's  Athletics at the 
University of Minnesota. Ms. Callen has been President of Callen & Associates. 
Inc. for a number of years.

Jeff Etten is a C.P.A. and a member of the Minnesota Society of Certified 
Public Accountants. Mr. Etten was formerly the C.F.O. of Heritage Computer. 
Mr. Etten received his BS degree in Accounting from the University of 
Wisconsin-Eau Claire.

Key Personnel
Dennis Krause is the President and a Director of Ives Design, Inc. and is in 
charge of production. 

Item 11:  Executive Compensation
          (a)  Remuneration
Compensation Pursuant to Agreements

     In May 1993 the Company entered into an employment agreement with Mark 
Haggerty to serve as Senior Vice-President. Mr. Haggerty has been and will 
continue to act as corporate counsel. Mr. Haggerty's salary is $65,000 per 
year and his law firm, Haggerty & Associates, Inc. is retained at an 
additional $12,000 per year.  The agreement with Mr. Haggerty allows him to 
retain a limited number of clients while employed with the Company since his 
contract only requires him to work 80% of his time for the Company.  Mr. 
Haggerty also receives an automobile allowance; is reimbursed expenses 
incurred on company business; receives four weeks paid vacation per year as 
well as medical insurance and life insurance through Ives Design, Inc. On 
September 9, 1993 the Board of Directors requested that Mr. Haggerty become 
the C.E.O.- C.O.O of Kensington and the Chairman and C.E.O. of Ives Design, 
Inc. Mr. Haggerty has portion of his salary and benefits accrued. 

Mr. Etten receives a combined salary from Kensington and Ives of approximately 
$53,500 a year for acting as C.F.O. of both companies. Mr. Etten also receives 
vacation and expenses reimbursement. 

The directors receive no pay and only get reimbursed for expenses. All of the 
directors have deferred reimbursement of expenses in order to make sure that 
production workers are paid first.

Compensation Pursuant to Plans
Stock Options

The Company has adopted an incentive stock option plan which authorizes a 
maximum of 750,000 shares that may be issued pursuant to the Plan. The Board 
of Directors may grant options to key individuals at their discretion. The 
exercise price for options issued pursuant to the Plan may not be less than 
85% of the fair market value of the Company's common stock on the date of 
grant of option. Any option granted must be exercised within ten years of its 
grant. The shares issued upon exercise of the options granted pursuant to the 
Plan have no registration rights unless specifically authorized by the Board 
of Directors. On March 17, 1995 the Company's board authorized the issuance of 
options at $.32 for a period of five years bringing the total of issued 
options to 380,872. 

The authorization of options and reduction in warrants were stated in the S-8 
filed in October 1995 and again in the PROXY STATEMENT mailed to all of the 
shareholders by the Transfer Agent on December 20, 1995.  

Item 12. Security Ownership of Certain Beneficial  Owners and               
Management 

PRINCIPAL SHAREHOLDERS
     The following table sets forth information as of December 31, 1998 
regarding ownership of the Company's common stock by (i) the only persons 
known by the Company to own beneficially more than
five percent (5%) thereof; (ii) the directors individually, and (iii) all 
officers and directors as a group.  All persons listed have sole voting and 
investment power with respect to their shares unless otherwise indicated.

     NAME               Shares     Percentage

Dennis Krause          226,822          7%          
7733 Quincy St.
Spring Lake Park,
Minnesota  55432
Keith Bernhardt     176,104              5%
107 Cliffmore Rd
W. Hartford, CT 
06107

Bernard M.S. Kegan     177,609          6%          
1805 Eagle Ridge Dr.
#10 West Court
Mendota Heights,
Minnesota  55118

G. Wallace             162,500           5%
151 Yonge St.
Toronto, Canada

All Officers, key     669,898         21%          
persons & directors as a 
Group, eight persons (1) (2)

(1)  Includes shares issued to the Joan Witter Trust and the Witter Family 
Trust wherein Keith A. Witter, a Company Director, surrendered his control and 
right to vote.
(2) Does not include Bernard M.S. Kegan. 

Item 13. Certain Relationships and Related Transactions.

CERTAIN TRANSACTIONS
     In connection with the Company's 1992 acquisition of American Gas, the 
Company assumed certain obligations of American Gas.  Among these obligations 
was the issuance of the Company's securities (as described more fully below) 
to creditors and investors who participated in a series of oil and gas 
drilling partnerships promoted by Liberty National Corporation ("Liberty"), a 
defunct corporation whose assets American Gas acquired in a sale approved by 
the Superior Court of the State of California, Orange County. These conditions 
were changed by Court Order of May 3, 1994 where the 634 Liberty National 
investors are to receive 125,000 shares and 1,000,000 Class A Liberty Warrants 
as described herein. These Class A Liberty Warrants are subject to redemption 
at the sole option of the Company at any time commencing three months after 
their issuance, at a redemption price of $.001 per Class A Liberty Warrant. 
The Company shall give thirty days' written notice to all holders of the 
Liberty Warrants of such redemption, during which time the holder shall have 
the right to exercise such Warrant. Upon notice of redemption to the warrant 
holders and the warrant holders failure to exercise their right of conversion, 
the Company shall, upon surrender and delivery of the warrant certificates to 
the Company or its transfer agent, pay the warrant holder a sum equal to the 
$.001 redemption price per warrant times the number of warrants surrendered. 
At the date of drafting this 10-KSB, no Liberty Warrants have been either 
issued or exercised. 

DESCRIPTION OF SECURITIES

Common Stock
     The Company has authorized 50,000,000 shares of stock, no par value. 
40,000,000 shares have been designated as common stock and 10,000,000 as 
unclassified. Each holder of common stock has one vote per share on all 
matters voted upon by the shareholders. Such voting rights are non-cumulative 
so that the shareholders holding more than 50% of the outstanding shares of 
common stock are able to elect all members of the Board of Directors. There 
are pre-emptive rights or other rights of subscription.     Each share of 
common stock is entitled to participate equally in dividends if and when 
declared by the Board of Directors of the Company out of the funds legally 
available and is entitled to participate equally in the distribution of assets 
in the event of liquidation. All shares, when issued and fully paid, are 
non-assessable and are not subject to redemption or conversion and have no 
conversion rights.

     The value of a share has been arbitrarily determined. The offering price 
bears no relationship to assets, earnings, book value or any other commonly 
used criteria for valuation.

Warrants 
     As of December 31, 1998 there are 651,950 warrants issued and outstanding 
at exercise prices of between $.50 and $3.00. 

     On September 11, 1992, the Company authorized the issuance of an 
aggregate of 800,000 warrants to the creditors/investors of Liberty (the 
"Class A Liberty Warrants"). The Class A Liberty Warrants were issued in 
connection with the sale of certain of Liberty's assets to the Company through 
and by virtue of the Company's acquisition of American Gas. These Liberty 
Warrants are issued subject to the terms and conditions of certain Warrant 
Agreements. The foregoing description of the Liberty Warrants is not complete 
and is qualified in all respects by the Liberty Warrant Agreement which is 
filed as an exhibit to the Registration Statement of which this Prospectus is 
a part.

     Each Class A Liberty Warrant entitles the holder thereof to purchase one 
share of the Company's common stock and one Class C Liberty Warrant at any 
time on or before six months from the date this Registration Statement is 
declared effective, for $2.50. Each Liberty Warrant contains anti-dilution 
provisions. At any time commencing three months from their issuance upon 30 
days' written notice, the Company may redeem all, but not less than all, 
unexercised Class A Liberty Warrants for $.001 per warrant.  Holders of Class 
A Liberty Warrants will not, as such, have any of the rights of shareholders 
of the Company. These Class A warrants were increased by California Court 
Order on May 3, 1994 from 800,000 to 1,000,000. All of the other terms and 
conditions remain the same.

     The Class C Liberty Warrants are issuable upon conversion of the Class A 
Liberty Warrants, and entitle the holder thereof to purchase one share of the 
Company's common stock for $7.00 per share, at any time on or before three 
years from issuance thereof.  The Class C Liberty Warrants contain 
anti-dilution provisions, are not subject to redemption by the company. and do 
not, as such, confer upon the holder thereof any of the rights of shareholders 
of the company.
     

Convertible Debentures:
As of December 31, 1998 the company had $431k of convertible debentures 
outstanding. Of this total, $176k is secured by a second mortgage on real 
estate of Ives Design Inc.  

Item 14. Exhibits and Reports on Form 8-K


     (A) Exhibits. See "Exhibit Index" on the page following the Signatures.

     (B) Reports on Form 8-K   None.





 SIGNATURES

   Pursuant to the requirements od Section 13 or 15(d) of the Securities and 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned officers and/or Directors, there unto duly 
authorized.


THE KENSINGTON COMPANY, INC.

               By: Mark Haggerty_____________________
               Mark Haggerty, C.E.O.- C.O.O. & Director

Dated: April 7, 1999



Mike Nakonechny___              Chairman
By: Mike Nakonechny
Dated: 7 April, 1999



 SIGNATURES

   Pursuant to the requirements od Section 13 or 15(d) of the Securities and 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned officers and/or Directors, there unto duly 
authorized.


THE KENSINGTON COMPANY, INC.

By: Mark Haggerty______________________
                    Mark Haggerty, C.E.O.- C.O.O. & Director




Keith Bernhardt___________                Director
By: Keith Bernhardt
Dated: 4/7, 1999

 SIGNATURES

   Pursuant to the requirements od Section 13 or 15(d) of the Securities and 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned officers and/or Directors, there unto duly 
authorized.


THE KENSINGTON COMPANY, INC.

By: Mark Haggerty_______________________
Mark Haggerty, C.E.O.- C.O.O. & Director

G. Wallace___________Director
By: Graeme Wallace
Dated: April 15, 1999

 SIGNATURES

   Pursuant to the requirements od Section 13 or 15(d) of the Securities and 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned officers and/or Directors, there unto duly 
authorized.


THE KENSINGTON COMPANY, INC.

By: Mark Haggerty______________________
Mark Haggerty, C.E.O.- C.O.O. & Director





Keith Witter______________Director
By: Keith Witter
Dated: 4-5, 1999

THE KENSINGTON COMPANY, INC.

FORM 10-KSB

YEAR ENDED DECEMBER 31, 1998

INDEX


ITEMPAGE


PART I

1. Description of Business.................................... 1
2. Description of Property.....................................5
3. Legal Proceedings...........................................6
4. Submission of matters to vote of shareholders...............6
 
PART II

5. Market for Common equity & related stockholder matters..... 6
6. Management's discussion & analysis of Operations............6
7. Financial statements .................................F-1.&.7
8. Changes in and disagreements with Accountants on Accounting 
   and Financial Disclosure....................................7


PART III

9. Directors, Executive Officers, Promoters and Control Persons
   of the Company...............................................7
10 & 11 Executive compensation..................................9
12. Security ownership of certain beneficial owners and 
    management...............................................   10 
13. Certain relationships & related transactions................11
14. Descriptions of securities..................................12
15. Exhibits and reports on Form 8-K............................13
16. Signatures..................................................14

    Financial  Statements.......................................F-1


                              Exhibit Index

          Exhibit     Description
            #
      #3    Certificate of Incorporation *
#3.3  By-Laws of Company*
#10   Promissory notes payable***
#10.1 Acquisition of Ives & American Gas**
#10.4 Employment agreements***
#21.1 Form of Common Stock***
#21.2 Form of Warrants & Debentures*** 

*Filed as exhibits to Company's registration
33-38119-C to the SEC

**Filed as part of Form 8-K to SEC on 2-12-93

***Filed as an exhibit to Form 10-K filed on
June 1993.

All 10-Qs, 8-ks and amendments, S-8s and 10-Ks and 10-KSBs filed since 1989 
are incorporated herein by reference.




REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To Kensington International Holding Corporation:

We have audited the accompanying consolidated balance sheets of Kensington 
International Holding Corporation and subsidiaries as of December 31, 1998 and 
1997, and the related consolidated statements of operations, stockholders' 
deficit and cash flows for the years then ended.  These consolidated financial 
statements are the responsibility of the Company's management.  Our 
responsibility is to express an opinion on these consolidated financial 
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the consolidated financial 
statements are free of material misstatement.  An audit includes examining, on 
a test basis, evidence supporting the amounts and disclosures in the 
consolidated financial statements.  An audit also includes assessing the 
accounting principles used and significant estimates made by management, as 
well as evaluating the overall financial statement presentation.  We believe 
that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of Kensington 
International Holding Corporation and subsidiaries as of December 31, 1998 and 
1997, and the results of their operations and their cash flows for the years 
then ended, in conformity with generally accepted accounting principles.




LUND KOEHLER COX & ARKEMA, LLP

Minneapolis, Minnesota
January 22, 1999



KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997                         
                         
                         
                                   1998               1997     
ASSETS                         
Current assets:                         
  Cash                            $72,220           $10,185 
  Accounts receivable             563,823           474,780 
  Inventories                       195,843           189,926 
  Other current assets            22,208           44,634 
    Total current assets          854,094           719,525 
                         
Other assets:                         
  Property and equipment, net     295,659           316,975 
  Investment in oil and gas 
     properties, net              67,927           81,451 
  Investment in unconsolidated oil 
     and gas partnership          10,000           29,641 
  Notes receivable - related 
     parties, net               16,625           22,625 
  Loan costs, net                32,667           38,383 
    Total other assets           422,878           489,075 
                         
                                   $1,276,972           $1,208,600 
                         
LIABILITIES AND STOCKHOLDERS' DEFICIT                         
Current liabilities:                         
  Line of credit - bank                  $35,000           $148,099 
  Notes payable - related parties          124,715           238,217 
  Current portion of long-term debt          31,252           71,619 
  Current portion of capital lease 
     obligations                              16,614           22,835 
  Accounts payable                         283,365           310,982 
  Accrued expenses                           273,889           189,307 
    Total current liabilities              764,835           981,059 
                         
Long-term debt, net of current portion     815,615      722,933 
Capital lease obligations, net of 
     current portion                          5,912           22,526 
    Total liabilities                       1,586,362           1,726,518 
                         
Stockholders' deficit:                         
  Common stock, no par value, 
     50,000,000 shares authorized,     
     3,238,750 and 3,208,750 shares 
     issued and outstanding                3,596,883           3,589,383 
  Stock subscriptions receivable          (169,552)          (169,552)
  Accumulated deficit                 (3,736,721)          (3,937,749)
    Total stockholders' deficit          (309,390)          (517,918)
                         
                                       $1,276,972           $1,208,600 
                         
                         
See accompanying notes to consolidated financial statements.

KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 
1997                                             
                                             
                                             
                              1998                    1997               
                         Amount     Percent     Amount     Percent
                                             
Revenues               $3,934,579      100.0      $3,151,241      100.0 
                                             
Cost of sales          2,652,620      67.4           2,008,436      63.7 
                                             
Gross profit          1,281,959      32.6           1,142,805      36.3 
                                             
Operating expenses          975,204      24.8           951,316      30.2 
                                             
Loss on impairment of oil 
and gas investment          19,154      0.5           0           0.0 
                                             
Income from operations          287,601      7.3           191,489      6.1 
                                             
Other income (expense)          (86,573)     (2.2)          (151,103)     
(4.8)
                                             
Income before income taxes     201,028      5.1           40,386      1.3 
                                             
Provision for income taxes     0           0.0           0           0.0 
                                             
Net income                    $201,028      5.1           $40,386      1.3 
                                             
Basic and diluted earnings per
common share                   $0.06                      $0.01 
                                             
Shares used in computing basic and 
diluted earnings per common 
share                        3,234,084                  3,159,640           
                                             
                                             
See accompanying notes to consolidated financial 
statements.                             
                
KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 
1997                                                                 
                                        
                                    Stock                              
           Common Stock          Subscriptions     Accumulated
           Shares     Amount     Receivable          Deficit     Total     
                                                                 
Balance - 
December 
31, 1996    3,042,750  $3,671,848  $(297,332)   $(3,978,135)  $(603,619)

Issuance of 
common stock,
net of related 
costs     171,500      44,125      --               --          44,125 
Issuance of 
shares for 
services and
other     10,000      700           --               --           700 
Issuance of 
shares for 
retirement
of debt     7,000      490           --               --          490 
Cancellation of 
stock 
subscriptions(22,500)     (127,780)     127,780           --       0 
Net income     --          --          --               40,386      40,386 
                                                            
Balance -
December 
31, 1997     3,208,750      3,589,383      (169,552)  (3,937,749)  (517,918)

Issuance of 
common stock,
net of related
costs          30,000      7,500             --        --          7,500 
Net income     --          --                --         201,028    201,028 

Balance -
December 
31, 1998     3,238,750      $3,596,883   $(169,552)  $(3,736,721) $(309,390)
                                                       
See accompanying notes to consolidated financial statements.     

                                             
                                             
                                             
KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS                         
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997                         
                         
                         
                                            1998               1997     
Cash flows from operating activities:                         
  Net income                          $201,028           $40,386 
  Adjustment to reconcile net income to                         
  cash flows from operating activities:                         
  Depreciation, depletion and 
  amortization                            74,325           50,611 
  Gain on sales of equipment               0                (6,059)
  Loss on impairment of gas and oil 
  investment                              19,154           0 
  Expenses paid by issuance of common 
  stock                                       0                700 
  Equity in (earnings) loss of 
  unconsolidated oil and gas partnerships     487                (474)
  Minority interests in earnings of 
  consolidated oil and gas partnerships     0                1,340 
  Changes in operating assets and liabilities:                         
     Accounts receivable                   (89,043)          (252,395)
     Inventories                            (5,917)          3,300 
     Other current assets                      22,426           (38,096)
     Checks written in excess of cash 
     in bank                                   0                (37,428)
     Accounts payable                       (27,617)          41,408 
     Accrued expenses                       84,582           11,011 
      Cash flows from operating 
     activities                              279,425           (185,696)
                         
Cash flows from investing activities:                         
  Distributions from unconsolidated oil 
     and gas partnerships                         0                8,653 
  Distributions from consolidated oil 
     and gas partnerships                       0                21,091 
  Proceeds from sales of equipment              0                12,484 
  Purchases of property and equipment         (31,769)          (25,933)
  Collections on notes receivable - 
     related parties                            6,000           5,500 
      Cash flows from investing 
     activities                               (25,769)          21,795 
                         
Cash flows from financing activities:                         
  Net increase (decrease) in line of 
     credit - bank                           (113,099)          114,664 
  Decrease in notes payable - related 
parties                                      (32,404)          (45,589)
  Proceeds from long-term debt                15,484           365,000 
  Payments on long-term debt                   (44,267)          (39,986)
  Payments on obligations under capital 
     leases                                   (22,835)          (222,708)
  Payments of loan costs                    (2,000)          (32,606)
  Proceeds from issuance of common stock, 
     net of related costs                      7,500           44,125 
  Distributions to minority interests 
     in oil and gas partnerships               0                (25,000)
      Cash flows from financing 
     activities                              (191,621)          157,900 
                         
Increase (decrease) in cash                    62,035           (6,001)
                         
Cash, beginning of year                   10,185           16,186 
                         
Cash, end of year                         $72,220           $10,185 
                         
                         
See accompanying notes to consolidated financial 
statements.                         
                         
                         
KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997


(1) NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of business - Kensington International Holding Corporation (Kensington 
or the Company), was incorporated August 22, 1988, for the purpose of direct 
development of oil and gas properties in Kentucky.  In 1992, the Company's 
focus shifted from development of oil and gas properties to becoming a 
diversified company.  At December 31, 1998, the Company has three wholly-owned 
subsidiaries: Ives Design, Inc. (Ives), Bluegrass Management and Operating 
Company (Bluegrass) and Kensington American Gas Drilling #1, LLC (Drilling 
#1); and two majority owned corporations: I-Med Software, Inc. (I-Med) and 
Interchange Medical, Inc. (Interchange).

Ives was acquired in April 1992.  Ives manufactures non-refrigerated, 
customized display fixtures, primarily for the supermarket industry, and 
extends unsecured credit to customers in the normal course of business.  
Customers are located throughout the Midwest region of the United States.

Bluegrass was formally the wholly-owned subsidiary of American Gas Corporation 
(American).  During 1998, American was sold and the ownership of Bluegrass was 
transferred to the Company.  Bluegrass is currently inactive.

Drilling #1 was formed in 1997 and is inactive.

I-Med and Interchange were both formed in October 1996 and are inactive.

Through 1997, the Company owned a majority interest in two limited 
partnerships, Kensington 1986 and Kensington 1987.  On December 31, 1997, the 
Company exchanged its minority interests in several unconsolidated limited 
partnerships for a 100% interest in both partnerships (see note 5).

Principles of consolidation - The consolidated financial statements include 
the accounts of Kensington, Ives American, Kensington 1986 and Kensington 
1987.  All significant intercompany transactions and accounts have been 
eliminated in consolidation.

Accounts receivable - The Company considers all accounts receivable to be 
fully collectible, accordingly, no allowance for uncollectible accounts has 
been established.  If accounts become uncollectible, they are charged to 
operations when that determination is made.

Inventories - Inventories consist primarily of display fixtures and related 
raw materials and are valued at the lower of cost (first-in, first-out), or 
market.

Depreciation - Property and equipment are recorded at cost and are being 
depreciated over their estimated useful lives using the straight-line method.  
Depreciation expense was $53,085 and $42,604 for the years ended December 31, 
1998 and 1997.

Loan costs - Loan costs are amortized over the term of the loan on a 
straight-line basis.  Accumulated amortization was $7,296 and $1,603 at 
December 31, 1998 and 1997.

KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
DECEMBER 31, 1998 AND 1997


Investment in oil and gas properties - Investment in oil and gas properties is 
recorded at cost and consists of acquisition costs of the natural gas 
reserves, oil and gas leases and the related rights-of-way, wells, pipeline 
and related equipment.  The Company follows the successful effort method of 
accounting for oil and gas properties. Accordingly, intangible development and 
well completion costs of oil and gas properties are amortized over the 
estimated economic life of the wells when the related reserves are proven. 
Costs of drilling a well which do not result in proved reserves, net of any 
salvage value, are charged to expense when it is determined that the drilling 
has been nonproductive.  Geological and geophysical costs and costs of 
carrying and retaining undeveloped properties are charged to expense when 
incurred.

Unproved oil and gas properties are periodically assessed for impairment 
value, and any loss is recognized at the time of impairment by providing an 
impairment allowance.  Capitalized costs of producing oil and gas properties 
after considering estimated dismantlement, abandonment costs and estimated 
salvage values are depreciated and depleted by the unit-of-production method.  
Pipeline and other equipment are being depreciated over their estimated useful 
lives using the straight-line method.  Depreciation, depletion and 
amortization expense was $13,524 and $4,440 for the years ended December 31, 
1998 and 1997.

Revenue recognition - The Company recognizes revenue from sales at the time 
that ownership transfers to the customer, principally at shipment of the 
product, and upon completion of the earnings process for oil and gas 
activities. 

Advertising costs - Advertising costs are charged to expense as incurred.  
Advertising expense for the years ended December 31, 1998 and 1997 was $148 
and $2,638.

Earnings per common share - The Company adopted Statement of Financial 
Accounting Standards (FASB) No. 128 "Earnings Per Share" (Statement 128).  
Statement 128 requires disclosures of basic earnings per share (EPS) and 
diluted EPS.  Basic EPS is computed by dividing net income by the weighted 
average number of shares of common stock outstanding during the year.  Diluted 
EPS is computed by dividing net income by the weighted average common shares 
outstanding and dilutive common equivalent shares assumed to be outstanding 
during each period.  Dilutive common stock equivalents have not been included 
in the computations of diluted EPS because their inclusion would be 
antidilutive.  Antidilutive common equivalent shares issuable based on future 
exercise of stock options and warrants could potentially dilute EPS in future 
years.

Management's use of estimates - The preparation of financial statements in 
conformity with generally accepted accounting principles requires management 
to make estimates and assumptions that affect the reported amounts of assets 
and liabilities and disclosure of contingent assets and liabilities at the 
date of the financial statements and the reported amounts of revenues and 
expenses during the reporting period.  Actual results could differ from those 
estimates.

Fair value of financial instruments - The carrying amounts for all financial 
instruments approximates fair value.  The carrying amounts for cash, accounts 
receivable, accounts payable and accrued expenses approximate fair value 
because of the short maturity of these instruments.  The fair value of debt 
and capital leases approximates the current rates at which the Company could 
borrow funds with similar remaining maturities.

KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
DECEMBER 31, 1998 AND 1997


New accounting pronouncements - In June 1997, the FASB issued Statement No. 
130 "Reporting Comprehensive Income" (Statement 130).  Statement 130 
establishes new rules for the reporting and display of comprehensive income 
and its components in the financial statements.  The Company currently does 
not have any other comprehensive income, and therefore, will measure the 
impact of this statement, as it becomes necessary.

In June 1998, the FASB issued Statement No. 131 "Disclosures about Segments of 
an Enterprise and Related Information" (Statement 131).  Statement 131 
establishes new rules for the reporting and display of significant operating 
segments.  The Company has adopted the required reporting for all significant 
segments of their business.

In June 1998, the FASB issued Statement No. 133 "Accounting for Derivative 
Instruments and Hedging Activities" (Statement 133).  Statement 133 
establishes accounting and reporting standards for derivative instruments and 
hedging activities.  The Company is currently not involved in derivative 
instruments or hedging activities, and therefore, will measure the impact of 
this statement, as it becomes necessary.

Reclassifications - Certain accounts in the prior year consolidated financial 
statements have been reclassified for comparative purposes to conform to the 
presentation in the current year consolidated financial statements.  These 
reclassifications had no effect on net income or stockholders' deficit.

(2) INVENTORIES

Inventories consisted of the following at December 31:

                              1998          1997
Raw materials     $     113,343     $     85,156     
Work in process          7,531            26,733     
Finished goods              74,969          78,037     
   Total              $     195,843     $ 189,926     

(3) PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31:

                              1998                  1997
Land                   $     19,500          $     19,500     
Buildings                  268,699               268,699     
Equipment                   326,668               294,899     
Less: accumulated depreciation     (319,208)     (266,123)
                            $ 295,659          $ 316,975     




KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
DECEMBER 31, 1998 AND 1997


(4) INVESTMENT IN OIL AND GAS PROPERTIES

Investment in oil and gas properties, using successful efforts accounting, 
consisted of the following at 
December 31:

                                    1998                 1997
Proved properties            $     111,613          $     111,613     
Pipeline and equipment              87,344               87,344     
                                   198,957               198,957     
Less: accumulated depreciation, 
depletion and amortization          (131,030)               (117,506)
                               $     67,927          $     81,451     

No costs were incurred in oil and gas property acquisition, exploration and 
development activities during 1998 or 1997.

(5) INVESTMENT IN UNCONCOLIDATED OIL AND GAS PARTNERSHIP

Through 1997, the Company had general and limited partner interests in four 
unconsolidated oil and gas limited partnerships.  The Company's interests 
ranged from 10.8% to 46.6%.  The Company accounted for these interests using 
the equity method.  The equity method accounts for the Company's investment at 
cost, adjusted for the Company's proportionate share of undistributed earnings 
or losses.  On December 31, 1997, the Company traded its interest in two of 
the partnerships for 100% interest in two consolidated partnerships, 
Kensington 1986 and Kensington 1987.  Another of the partnerships ceased 
business on December 31, 1997, for which no loss was incurred.  The Company 
continues to maintain their 46.6% limited partner interest in one 
partnership.  After reviewing the expected future cash flows of this 
investment, the Company determined that this investment was partially impaired 
and reduced the investment to $10,000 in 1998 and recorded a loss on 
impairment of $19,154.

(6) NOTES RECEIVABLE - RELATED PARTIES

Notes receivable - related parties consisted of the following at December 31:

                                                1998          1997
B & K Oil Company, Inc., interest 
at 8%, unsecured, due on demand, 
currently receiving $500 per month.     $     26,625     $     32,625     
                                   
B & D Commercial Ventures, written 
off in 1998.                                    0               30,000     
                                   
Less: reserve for uncollectible 
notes receivable                             (10,000)          (40,000)
                                          $     16,625     $     22,625     

B & K Oil Company, Inc. (B & K) is owned by three individuals, two of which 
are Kensington stockholders.  

KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
DECEMBER 31, 1998 AND 1997


(7) LINE OF CREDIT - BANK 

The Company has a $200,000 line of credit with Riverside Bank.  The line bears 
interest at 1.5% over the bank's reference rate (9.25% at December 31, 1998), 
matures October 1999, and is secured by all of the Company's assets and 
guaranteed by two of its directors/stockholders.  Outstanding borrowings were 
$35,000 and $148,099 at December 31, 1998 and 1997.

(8) NOTES PAYABLE - RELATED PARTIES

Notes payable - related parties consisted of the following at December 31:

                                              1998          1997
Note payable to stockholder, interest 
at 12%, due on demand, unsecured.     $     16,500     $     16,500     
                                   
Note payable to stockholder, interest 
at 8%, due February 1994, unsecured.     3,750               4,500     
                                   
Note payable to stockholder, interest 
at 9%, due December 1993, unsecured.     39,800          39,800     
                                   
Note payable to stockholder, monthly 
installments of $1,800 including 
interest at 8%, due January 1998, 
secured by stock.                            7,953               33,938     
                                   
Note payable to stockholder, interest at 
10%, due May 1996, secured by Company's 
assets, currently paying $1,500 a month.  
Note holder has option to convert to 
common shares of Company stock at a 
conversion price of $.32 per share until 
note is paid.                                37,500          37,500     
                                   
Various notes payable to stockholders, 
unsecured                                      19,212          19,212     
                                   
Notes payable to a trust controlled 
by former officer/current stockholder, 
unsecured, assigned to a stockholder and 
converted to long-term debt (see Note 9).         0          86,767     
                                   
                                            $124,715        $238,217     

(9) LONG-TERM DEBT

Long-term debt consisted of the following at December 31:

                                                1998          1997
Debentures payable to stockholders 
and non-stockholders - monthly 
installments of interest at 12%, due 
three years from issue date through 
February 2001, $176,000 secured by 
Ives' real estate, remainder unsecured.  
Debenture holders have option to convert 
principal to common shares of Company 
stock at $1.00 per share until maturity.       $395,678     $430,944     
                                   

KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
DECEMBER 31, 1998 AND 1997


                                              1998          1997
Note payable - Equity Lending, Inc. - 
monthly installments of $3,654 
including interest at 10.5%, secured 
by real estate, due August 2007.               $357,664     $363,608     
                                   
Note payable to stockholder - monthly 
installments of $1,700 including 
interest at 12%, unsecured, due 
May 2004.                                        80,348          0     
                                   
Note payable - Riverside Bank - monthly 
installments of $493 including interest 
at 9%, secured by a vehicle, 
due June 2001.                                      13,177          0     
                                   
Total long-term debt                               846,867          794,552     
Less:  current portion                           (31,252)          (71,619)
Long-term debt, net                            $815,615          $722,933     

Future maturities of long-term debt are as follows for the years ending 
December 31:

                         1999     $     31,252     
                         2000          338,565     
                         2001          99,997     
                         2002          25,280     
                         2003          28,168     
                    Thereafter          323,605     
                        Total     $     846,867     

(10)   CAPITAL LEASE OBLIGATIONS

The Company leases certain equipment under capital lease agreements expiring 
through August 2000.  Interest is provided for at interest rates ranging from 
11.5% to 17.1%.  These obligations are secured by the equipment under lease. 
Total cost of the leased equipment is $90,862 and the accumulated amortization 
on this equipment was $70,819 and $49,587 at December 31, 1998 and 1997.

Future minimum lease payments required under the capital leases together with 
the present value of the future minimum lease payments are as follows for the 
years ending December 31:

                         1999     $     18,367     
                         2000          6,231     
                         Total          24,598     
Less: amount representing interest          (2,072)
Present value of future minimum lease 
payments                                  22,526     
Less: current portion                     (16,614)
Obligation under capital leases, net 
of current portion                          $5,912     



KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
DECEMBER 31, 1998 AND 1997


(11)   STOCKHOLDERS' DEFICIT

Stock subscriptions - During 1992, the Company issued 597,500 shares of common 
stock at per share prices ranging from approximately $.40 to $2.00 in exchange 
for subscriptions receivable aggregating $455,001. The subscriptions accrue 
interest at 8% and matured at various dates from February 1995 to July 1995 
and are secured by the underlying common stock.  The subscriptions and accrued 
interest are recorded as stock subscriptions receivable. 
In July 1997, the Board of Directors voted to treat as satisfied a $75,000 
stock subscription receivable because this stockholder had paid principal and 
interest in amounts similar to that of the other stockholders who were issued 
stock at the same time.

During October 1997, the Company cancelled 22,500 shares of common stock and 
the related $52,780 stock subscription agreement pursuant to an agreement with 
the stockholder to retire a note payable to the stockholder.

Stock warrants - Outstanding and fully vested stock warrants consisted of the 
following:

     
                                        Shares          Per Share
                                                          Price
Outstanding - December 31, 1996          1,265,883      $.50 - $3.00     
  Granted                                        0        .00     
  Canceled                                       0        .00     
Outstanding - December 31, 1997          1,265,883        $.50 - $3.00     
  Granted                                        0        .00     
  Canceled and expired                   (613,933)        $1.00 - $3.00     
Outstanding - December 31, 1998          651,950          $.50 - $3.00     

Stock option plan - The Company has a stock option plan, which authorizes a 
maximum of 750,000 shares of common stock for issuance under the Plan.  The 
Board of Directors may grant options at their discretion, provided the 
purchase price of the option shares are not less than 85% of the fair market 
value of the common stock on the date of the grant.  As of December 31, 1998, 
the Company had options outstanding to purchase 380,872 shares of common 
stock, exercisable at $.32 per share through March 2000.

The Company applies APB Opinion 25 "Accounting for Stock Issued to Employees" 
and related Interpretations in accounting for its stock options.  Accordingly, 
no compensation cost has been recognized for its stock options.  Had 
compensation cost for the Company's stock options been determined based on the 
fair value at the grant dates consistent with the method of Statement of 
Financial Accounting Standards    No. 123 "Accounting for Stock Based 
Compensation" (Statement 123), the Company's net income and EPS would not have 
changed.



KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
DECEMBER 31, 1998 AND 1997


Information regarding the Company's stock options is summarized below:

                      1998                           1997
     
               Shares     Weighted           Shares           Weighted
                          Average                             Average
                         Exercise Price                    Exercise Price


Options outstanding,
beginning of year     
                581,872    $1.11            581,872              $1.11
  Granted             0     .00                  0               .00
  Canceled     (201,000)     2.62                0                .00
  Exercised          0      .00                   0                .00
Options outstanding, 
end of year     
                 380,872     $.32            581,872                $1.11
Options exercisable,
end of year     
               380,872     $.32              581,872                 $1.11
Weighted average 
fair value of 
options granted             $.00                                     $.00

Options outstanding at December 31, 1998 have an exercise price of $.32 and a 
weighted average remaining contractual life of 1.21 years.

In determining the compensation cost of the options granted during 1998 and 
1997, as specified by Statement 123, the fair value of each option grant has 
been estimated on the date of grant using the Black-Scholes option pricing 
model and the weighted average assumptions used in these calculations are 
summarized below:

                                          1998          1997
Risk free interest rate                    7%               7%     
Expected life of options granted          5 years          5 years     
Expected volatility of options granted     0.0%               0.0%     
Expected dividend yield                    0.0%               0.0%     

Modification of American Gas Corporation acquisition - In 1995, the Company 
finalized payment for its acquisition of American by issuing 125,000 shares of 
common stock to a court appointed trustee for the benefit of the shareholders 
of Liberty National Corporation.  The court also required the Company to issue 
1,000,000 warrants at an exercise price of $2.50 per share.  The warrants are 
valid for six months from the date of issue, which is yet to be determined, 
and are callable by the Company after three months.  The Company is required 
to issue new warrants to those who exercise the $2.50 warrants.  These new 
warrants will have an exercise price of $7.00 per share for a period of three 
years.  The new warrants are not callable by the Company.  The Company's 
original obligation was to issue 200,000 shares of common stock and 800,000 
warrants.


KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
DECEMBER 31, 1998 AND 1997


(12)   COMMITMENTS AND CONTINGENCIES

Operating lease - The Company leases its corporate office space under a lease 
expiring in March 2000.  Base rent ranges from $1,324 to $1,353 per month for 
the remaining term of the lease.  Rent expense for the years ended December 
31, 1998 and 1997 was $16,559 and $13,363.

Future minimum rental payments are $16,149 and $4,059 for the years ending 
December 31, 1999 and 2000.

Settlement of lawsuits - Pursuant to a settlement agreement, in 1993 the 
Company transferred its rights and interests in the Gladys Harrell No. 1-14 
Well (Gladys) to the plaintiffs and guaranteed that the plaintiff's interest 
in the Gladys will generate $12,500 of cash flow per year through November 
2002 or until in aggregate $125,000 has been received. In addition to the 
Gladys cash flows, the Company paid $29,543 (including $28,088 remitted 
directly from partnerships during 1997) under the agreement for 1997.  During 
1997, the Company completed paying the $125,000 and pursuant to their 
agreement transferred ownership of the wells to the plaintiffs.

Major customer - The Company had sales to a single customer and its affiliates 
representing approximately 82% and 84% of total product sales for the years 
ended December 31, 1998 and 1997. Accounts receivable from this customer and 
its affiliates represented approximately 70% and 90% of total accounts 
receivable at December 31, 1998 and 1997.

(13)   INCOME TAXES

The Company has incurred cumulative net operating losses for both financial 
reporting and income tax purposes.  As of December 31, 1998, the Company had 
net operating loss carryforwards of approximately $2,890,000, which, if not 
used, will begin to expire in 2003.  Future changes in the ownership of the 
Company may place limitations on the use of these net operating loss 
carryforwards.  The Company has recorded a full valuation allowance against 
the net deferred tax asset due to the uncertainty of realizing the related 
benefits.  

                                   1998          1997
Net operating loss carryforwards     $1,150,000          $1,010,000     
Less: valuation allowance          (1,150,000)          (1,010,000)
  Net deferred taxes                       $0               $0     

KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
DECEMBER 31, 1998 AND 1997


(14)   OTHER INCOME (EXPENSE)

Total other income (expense) for the years ended December 31, 1998 and 1997 
are as follows:

                                          1998          1997
Interest income                          $0               $278     
Interest expense                      (102,285)          (109,264)
Interest expense - related parties     (15,052)          (17,508)
Litigation settlement                   (525)               (29,543)
Equity in earnings (loss) of 
unconsolidated oil and gas partnerships  (487)               474     
Minority interests in earnings of 
consolidated oil and gas partnerships     0               (1,340)
Gain on sale of equipment                 0                 800     
Other income                              31,776          5,000     
  Total other income (expense)         $(86,573)          $(151,103)

(15)   SEGMENT REPORTING

The Company operates in two industry segments: manufacturing and oil and gas.  
Manufacturing consists of the fabrication, marketing, and distribution of 
non-refrigerated, customized display fixtures.  Oil and gas consists of the 
production of natural gas and oil interests in the United States.  A summary 
of the operations by segment is as follows:

                                               1998          1997
Revenues from unaffiliated customers:                                   
  Manufacturing                            $3,906,590     $3,115,944     
  Oil and gas                                  27,989          35,297     
    Consolidated                           $3,934,579          $3,151,241     
                                   
Operating profit (loss):                                   
  Manufacturing                                $419,079          $384,389     
  Oil and gas                                    544               7,124     
  General corporate                              (132,022)          (200,024)
    Consolidated                               $287,601          $191,489     
                                   
Identifiable assets:                                   
  Manufacturing                              $1,180,918          $1,071,421     
  Oil and gas                                82,714          88,534     
  General corporate                             13,340          48,645     
    Consolidated                             $1,276,972          $1,208,600     



KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
DECEMBER 31, 1998 AND 1997



                                                  1998          1997
Depreciation, depletion and amortization:                                   
  Manufacturing                                $59,710          $42,527     
  Oil and gas                                  13,524          6,404     
  General corporate                             1,091               1,680     
    Consolidated                              $74,325          $50,611     
                                   
Capital expenditures:                                   
  Manufacturing                                   31,769          23,750     
  Oil and gas                                      0               0     
  General corporate                                 0               2,183     
    Consolidated                                $31,769          $25,933     

(16)   SUPPLEMENTAL CASH FLOWS INFORMATION

                                                  1998          1997
                                   
Cash paid for interest                          $106,454          $122,340     
                                   
Noncash investing and financing activities:                                   
                                   
  Common stock issued to retire debt               $0            $490     
                                   
  Common stock issued in exchange for 
     services and other                             $0               $700     
                                   
  Equipment acquired under capital leases          $0             $22,950     

(17)   SUPPLEMENTARY OIL AND GAS INFORMATION

Results of operations for oil and gas producing activities were as follows for 
the years ended December 31:
                                                      1998          1997
Oil and gas sales                                 $27,989          $35,297     
Well depreciation and depletion                   (13,524)          (7,476)
Production and operating costs                    (22,488)          (20,697)
Operating income (loss) from oil 
and gas producing activities 
(excluding corporate overhead and 
interest costs)                                   $(8,023)          $7,124  

Reserve information (unaudited) - While reserves still exist, higher than 
anticipated production costs and substantial additional development 
expenditures necessary make it highly unlikely these properties will provide 
future positive net cash flows.  As a result, accurate and meaningful reserve 
quantities are unknown.  All of the Company's reserves are located in the 
United States.